Airline stocks mixed as oil tops 81 a barrel
Legacy carriers ring in new year with fare hikes
By Christopher Hinton, MarketWatch
Last Update: 10:25 AM ET Jan 4, 2010
NEW YORK (MarketWatch) -- Airline stocks were mixed Monday, the first trading day of the year, as domestic carriers raised roundtrip fares while also facing higher fuel prices.
At last check, the NYSE Arca Airline Index XAL rose a fraction to 33.83 points. Six of its 13 components moved higher.
In the last 52 weeks, the sector benchmark has moved in a range of 34.92 to 12.62 points.
All of the major network carriers were in the red, with Delta Air Lines DAL dropping 2% to 11.12, American Airlines parent AMR Corp. AMR falling 2% to 7.58 and US Airways Group LCC declining 1.5% to 4.77.
Crude for February delivery was last up 1.87, or 2.4%, to 81.23 a barrel -- the highest in more than two months. See more on rising prices for crude oil.
Airlines rang in the new year by jacking up domestic ticket prices.
Just before the three-day weekend, UAL Corp.'s UAUA United Airlines bumped up more tha 15,000 city pairs by 6 to 10 a roundtrip, according to FareCompare.com. That move was later matched by American, Delta, US Airways, Continental Airlines CAL and Alaska Air Group ALK.
The increase marked the fourth successful hike of 2009, compared to 15 in 2008 and 17 in 2007, the travel Web site said.
"The hike did not have any effect on a variety of airfare sales in the domestic system for travel through early March," FareCompare.com said in a statement. "Legacy airlines also tiptoed around overlapping low-cost airline routes (Southwest LUV, JetBlue JBLU, AirTran AAI) as the group has yet to participate in the hike."
FareCompare.com noted that it's "very rare to see all legacy airlines match a hike in such a short time span and have the hike fizzle."
The hike in domestic fares coincided with an increase in airport security overseas for U.S.-bound flights. Passengers arriving from 14 nations deemed "state sponsors of terrorism" or "countries of interest" will be screened more carefully.
Before the long weekend, the Department of Homeland Security said the Transportation Security Administration would increase pat-downs and bag searches at airport security gates, as well as require passengers to stow more personal items, turn off electronic equipment and remain seated during certain portions of flights.
There have also been media reports that passengers have to return blankets and pillows before their aircraft begin to descend. Read more about the new federally mandate security measures going into effect.
Also overseas, Japan Airlines Corp. JALS.Y took a potential step away from bankruptcy after the state-owned Development Bank of Japan said it may double its credit line for the troubled carrier.
Further, the Tokyo-based carrier will join Delta in its SkyTeam Alliance, according to a media report that cited state-backed Enterprise Turnaround Initiative Corp. of Japan. Such a move would be a significant win for Delta as it grows its Asia-bound routes.
JAL is now working to terminate tie-up negotiations with American Airlines. Read more about Japan Airlines.
Elsewhere, the Federal Aviation Administration said Friday it will increase oversight of American following three botched landings over a 11-day period, The Wall Street Journal reported.
The FAA will begin analyzing the Ft. Worth, Texas-based carrier's data on landing incidents and voluntary pilot reports, the newspaper said. Agency officials are expected to assess pilot-training programs and past management response to safety issues. Read more about the FAA and American Airlines.